EMC 2002 Annual Report Download - page 28

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Table of Contents
any action in which such individual may be involved by reason of such individual being or having been a director or officer of EMC.
In connection with certain acquisitions, we have agreed to indemnify the current and former directors, officers and employees of the acquired company
in accordance with the acquired company's by-laws and charter in effect immediately prior to the acquisition. In a substantial majority of instances, we have
maintained the acquired company's directors' and officers' insurance, which should enable us to recover a portion of any future amounts paid. In connection
with certain dispositions, we have agreed to indemnify the buyer for certain matters, such as breaches of representations and warranties. These indemnities
vary in length of time.
Based upon our historical experience and information known as of December 31, 2002, we believe our liability on the above guarantees and
indemnities at December 31, 2002 is immaterial.
Notes and Accounts Receivable
We derive revenues from both selling and leasing information storage systems. We customarily sell the notes receivable resulting from our leasing
activity to provide for current liquidity. Generally, we do not retain any recourse on the sale of these notes. From time to time, we may also sell accounts
receivable when it is economically beneficial.
Litigation
In April 2002, EMC filed a complaint against Hitachi with the ITC and in the United States Federal District Court in Worcester, Massachusetts. The
ITC complaint alleged that Hitachi had engaged in unlawful activities by importing into the United States products that infringed six EMC patents. We asked
the ITC to issue an injunction to block importation of Hitachi's infringing products and in May 2002, the ITC voted to commence an investigation into our
claims. The suit in District Court seeks preliminary and permanent injunctions as well as unspecified monetary damages for patent infringement. In June
2002, the suit in District Court was stayed, pending the outcome of the ITC action. Subsequent to the date we filed a complaint against Hitachi, in April 2002,
Hitachi and HICAM filed a complaint against us in the United States Federal District Court for the Western District of Oklahoma alleging that certain of our
products infringe eight Hitachi patents and seeking preliminary and permanent injunctions as well as unspecified monetary damages for patent infringement.
In July 2002, this suit was transferred to the United States Federal District Court in Worcester, Massachusetts. In March 2003, EMC and Hitachi jointly
announced that the parties had entered into agreements whereby they agreed (i) to settle all pending patent infringement claims between EMC, Hitachi and
HICAM, (ii) to cross-license their respective patents and (iii) to a framework for exchanging technology in the form of storage-related APIs. In accordance
with the cross-license agreements, we will receive payments from Hitachi. The cross-license agreements expire at the end of 2007. On February 27, 2003,
EMC and Hitachi filed a Joint Motion with the ITC to terminate the ITC investigation on the basis of the above-referenced agreements, and on March 11,
2003, the ITC judge signed an order terminating the ITC investigation. The parties intend to move to dismiss the district court actions referenced above once
the ITC judge's order has been accepted by the ITC.
On September 30, 2002, EMC filed a complaint against HP in the United States Federal District Court in Worcester, Massachusetts alleging that certain
HP products infringe six EMC patents. The suit seeks a permanent injunction as well as unspecified monetary damages for patent infringement. On September
30, 2002, HP filed a complaint against us in the United States Federal District Court for the Northern District of California alleging that certain of our
products infringe seven HP patents. The suit seeks a permanent injunction as well as unspecified monetary damages for patent infringement. We believe that
HP's claims are without merit, and on October 1, 2002, we filed an amended complaint asking the court to declare that the seven HP patents are invalid and
not infringed.
We are a party to other litigation which we consider routine and incidental to our business. Management does not expect the results of any of these
actions to have a material adverse effect on our business, results of operations or financial condition.
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